ABSTRACT: This article will focus on recent developments in the European Union and the United States relating to antitrust issues arising from the acquisition of partial ownership interests in an entity. An important distinction exists in the treatment of partial ownership acquisitions between the European Union and the United States. While the European Commission (the "EC") does not (currently at least) have competence under its merger control rules to review partial ownership acquisitions that do not confer control on the purchaser, the U.S. authorities (and certain EU Member States) have broader jurisdiction.

ABSTRACT: We present an infinite horizon model that studies the competition between a relatively ineffective incumbent Credit Rating Agency (CRA) and a sequence of entrant CRAs that are potentially more e¤ective but whose ability in appraising default risk is unproven at the time they enter the market. We show that free entry competition in the credit rating business fails in selecting the most competent CRA as long as two conditions are met. First, investors and issuers trust the incumbent CRA to provide a sincere, although imperfect, assessment of issuers’ default risk. Second, CRAs cannot charge higher fees for low rating than for high rating. Under these conditions a rather incompetent CRA can dominate the market without being worried about potentially more competent entrants. We derive policy implications.

ABSTRACT: This paper investigates various options for the organization of the railway industry when network operators require the access to multiple national networks to provide international (freight or passenger) transport services. The EU rail system provides a framework for our analysis. Returns-to-scale and the intensity of competition are key to understanding the impact of vertical integration or separation between infrastructure and operation services within each country in the presence of international transport services. We also consider an option in which a transnational infrastructure manager is in charge of offering a coordinated access to the national networks. In our model, it turns out to be an optimal industry structure.

ABSTRACT: This article quantifies the impact of Wal-Mart Supercenters on supermarkets’ profitability via a two-stage dynamic entry game, using method of simulated moments and milk scanner data from Dallas/Fort Worth supermarkets. The empirical findings show that the entry of Wal-Mart Supercenters accounts for about an average 50% decrease in milk profit margins for incumbent supermarkets. Effects of scale are found to be more significant for Wal-Mart Supercenters than for incumbent supermarkets, granting Wal-Mart a competitive edge.

ABSTRACT: This article provides a rationalization of (at least partial) professional self-regulation resting on the joint production of individual and collective reputations and its impact on the quality of professional services. It presents a short model that aims to show that (i) a high-quality steady-state exists in a market for a credence goods and that (ii) the likelihood of high quality increases when the market is self-regulated by the profession in comparison to the situation where there is no self-regulation. The law and economics literature usually criticizes self-regulation as a modern form of corporatism; we show that it may help to regulate quality when clients are faced with opportunistic professionals.

Pierre Dubois (Toulouse School of Economics), Olivier de Mouzony (Toulouse School of Economics), Fiona Scott-Morton (Yale), and Paul Seabright (Toulouse School of Economics) have written on Market Size and Pharmaceutical Innovation.

ABSTRACT: This paper quantifies the relationship between market size and innovation in the pharmaceutical industry. We estimate the elasticity of innovation, as measured by the number of new chemical entities appearing on the market for a given disease class, to the potential market size represented by the willingness of su¤erers of diseases in that class (and others acting on their behalf such as insurers and governments) to spend on their treatment during the patent lifetime. We find positive significant elasticities with a point estimate under our preferred specification of 25.2%. This suggests that at the mean market size an additional $1.8 billion is required in additional patent life revenue to induce the invention of one additional new chemical entity. An elasticity substantially and significantly below one-half is also a plausible implication of the hypothesis that innovation in pharmaceuticals is becoming more di¢ cult ! and expensive over time, as costs of regulatory approval rise and as the industry runs out of "low hanging fruit".

The purpose of the conference is to take stock of recent advances in the analysis of economic organization and institutions inspired by the work of 2009 Nobel Laureate Oliver Williamson and to examine its implications for contemporary problems of organization, regulation, and finance. Empirical research and research informed by detailed industry and institutional knowledge is especially welcome.

ABSTRACT: This paper uses a two-sided market model of hospital competition to study the implications of different remunerations schemes on the physicians’ side. The two-sided market approach is characterized by the concept of common network externality (CNE) introduced by Bardey et al. (2010). This type of externality occurs when occurs when both sides value, possibly with different intensities, the same network externality. We explicitly introduce e¤ort exerted by doctors. By increasing the number of medical acts (which involves a costly effort) the doctor can increase the quality of service offered to patients (over and above the level implied by the CNE). We first consider pure salary, capitation or fee-for-service schemes. Then, we study schemes that mix fee-for-service with either salary or capitation payments. We show that salary schemes (either pure or in combination with fee-for-service) are more patient friendly than! (pure or mixed) capitations schemes. This comparison is exactly reversed on the providers’ side. Quite surprisingly, patients always loose when a fee-for-service scheme is introduced (pure of mixed). This is true even though the fee-for-service is the only way to induce the providers to exert e¤ort and it holds whatever the patients’ valuation of this effort. In other words, the increase in quality brought about by the fee-for-service is more than compensated by the increase in fees faced by patients.

This year's ACLE Competition & Regulation Meeting focuses on what we can learn from behavioral economics for the enforcement of competition law and regulation. Much of market oversight is based on insights from economic models with rational decision-makers. Yet a substantial body of research shows that many individuals are better characterized as being boudedly rational. In consumption choices as well as contexts that resemble executive decisions, people display such deviations from rationality as time inconsistency, overweighting of small probabilities, and failure to ignore sunk costs. To be effective, regulators and competition authorities need to understand these aspects of behavior.

Call for Papers Academics, private practitioners and competition officials, both with a legal and an economic background, are encouraged to submit their research for inclusion in the conference program. We welcome all original research (in progress) related to the topic.

Submission details

Submissions (full papers or abstracts) may be sent together with the author’s contact details to: ACLE@uva.nl The deadline for submission is March 1 2012. Decisions on acceptance to the program will be communicated by mid March.

The scientific program committee, which consists of Jeroen van de Ven (chair) Kati Cseres, Michael Frese, Saskia Lavrijssen, Maarten Pieter Schinkel, Jo Seldeslachts and Adriaan Soetevent, will produce a full day program based on the response to this call.

More Information For more information, please visit the ACLE conference website:

ABSTRACT: During the last decade, the proliferation of Low Cost Carriers and the related huge increase in traffic has been the most visible effect of the deregulation of the airline market in Europe. Little attention has been paid to how airports were affected by the changes in the new institutional environment. In this study we model the total factor productivity (TFP) for a panel of the UK largest airports over the 2002-2005 period and investigate whether the presence of LCCs has some impact on airports' TFP. Empirical results are consistent with the hypothesis that conspicuous entry of LCCs on European markets has impacted positively on the vertical chain by facilitating airports' productivity improvements. This result is robust to reverse causality issues associated with the possibility that most efficient airports are those that are more likely to attract LCCs. Different possible arguments may explain our results: traffic increases brought about by LCCs for a given installed capacity might have generated higher TFP; more efficient organizational models might have been adopted to meet LCCs operational requirements (short turnaround times); cost reductions might have been realized in order to lower charges and attract LCCs; competition from a larger number of airports induced by LCCs' wider catchment areas (with respect to full service airlines) might have exerted further pressure toward TFP improvements.

ABSTRACT: Healthier food diet is likely to prevent numerous non communicable diseases. Then there is a growing interest in evaluating the impact of food price taxation on food consumption. However, strategic reactions of both manufacturers and retailers are missing in empirical analysis. Rather, passive pricing is assumed. We develop a structural econometric model, to analyze vertical relationships between the food industry and the retail industry. We apply this model to the beverage industry and consider taxation of sugar. After selecting the ’best’ model of vertical relationships, we simulate different taxation scenarios. We consider excise tax as well as ad valorem tax. We find that firms behave differently when facing an ad valorem tax or an excise tax. Excise tax is overshifted to consumer prices while ad valorem tax is undershifted to consumer prices. We find that an excise tax based on sugar content is the most efficient at reducing soft drink consumption. Our results also indicate that ignoring strategic pricing by firms leads to misestimate the impact of taxation by 15% to 40% depending on the products and the tax implemented.

ABSTRACT: This paper provides new evidence on price dispersion in the US airline industry. Using the observed fare differences between refundable and non-refundable tickets, we first document evidence on the prices passengers pay for a refund option. We find that the factors related to the value of refund option and customers' individual demand uncertainty have a significant effect on the relative refund fares. This finding is robust for various market structures. Further, taking into account the variations of the relative refund fares, we investigate the effects of market structure on price dispersion.

JOB SUMMARY: The Federal Trade Commission (FTC) enforces a variety of Federal antitrust and consumer protection laws. The FTC seeks to ensure that the nation's markets function competitively and are vigorous, efficient, and free of undue restrictions. The FTC also works to enhance the smooth operation of the marketplace by eliminating marketing acts or practices that are unfair or deceptive. The FTC conducts economic analyses to support its law enforcement efforts and to contribute to the policy deliberations of the Agency, the Congress, the Executive Branch, and other organizations.

The Office of International Affairs ("OIA") builds cooperative relationships with counterpart agencies abroad, promotes convergence of international competition and consumer protection policies towards best practices, including through participation in multilateral fora, and serves as an internal resource for Commission staff on the international aspects of their work, including on case coordination with agencies internationally.

In support of the FTC's international competition mission, OIA is seeking an attorney with several years of relevant experience to serve as a Counsel for International Antitrust.

This position is not included in the bargaining unit.

KEY REQUIREMENTS

•Possess a J.D or LL.B. (or an LL.M) degree from an accredited law school. •Member in good standing of the Bar of a state or territory - U.S, P.R, D.C. •Relocation expenses will not be paid. •This position requires U.S. Citizenship.

QUALIFICATIONS REQUIRED: Back to topYou must have attained the first professional law degree (LL.B, J.D., or LL.M) and be a member of a state bar. The applicant should have significant experience with international antitrust law and/or policy as well as expertise in US antitrust law. The applicant also should possess excellent communication, analytic and legal writing skills, sound judgment, and the ability to work independently and effectively with other people. Willingness to travel internationally is required and proficiency in a foreign language, particularly Spanish, is a plus. You are required to have a minimum of two years (24 months) of substantive legal experience after graduation from law school to qualify for the GS-13 level, three and half years (42 months) of substantive experience after graduation from law school to qualify for the GS-14 level and five or more years (60 months or more) of substantive legal experience after graduation from law school to qualify for the GS-15 level.

Please note that prior experience, legal and nonlegal experience gained before completing law school cannot be used to satisfy the post law school experience requirements.

Individuals applying for this announcement are required to complete and submit an online application and all supporting documentation through the Office of Personnel Management (OPM) application system, USAJOBS.

HOW YOU WILL BE EVALUATED: You will be evaluated based on the overall strength of your credentials as demonstrated by your cover letter, resume, writing sample, and experience. The most qualified candidates will be selected for interviews, which will also be considered in making the final decision.

Application of Veterans' Preference: There is no formal rating system for applying veterans' preference to attorney appointments in the excepted service; however, the Federal Trade Commission considers veterans' preference eligibility as a positive factor in attorney hiring. If you are eligible for veterans' preference are encouraged to include that information in their cover letter or resume and attach supporting documentation (e.g., DD Form 214 or other substantiating documents) to your submission.

ABSTRACT: Traditional theories of airline pricing maintain that fares monotonically increase as fewer seats remain available on a flight. A fortiori, this implies a monotonically increasing temporal profile of fares. In this paper, we exploit the presence of drops in offered fares over time as an indicator of an active yield management intervention by two main European Low-Cost Carriers observed daily during the period June 2002 - June 2003. Our results indicate that yield management is effective in raising a flight's load factor. Furthermore, yield management interventions are more intense, and generate a stronger impact, on more competitive routes: one possible interpretation is that a reduction in competitive pressure allows the carriers to adopt a more standardized approach to pricing. Similarly, we find that yield management interventions are more effective in raising the load factor on routes where the customer mix is more h! eterogenous (i.e., it includes passengers traveling for leisure, business and for family matters). On markets with homogeneous customer base, no robust yield management effect was observed.

ABSTRACT: We study merger waves in vertically related industries where firms can engage in both vertical and horizontal mergers. Even though any individual merger would have been profitable, firms may refrain from merging for fear of negative impacts from other mergers. When they do merge, however, they always merge in waves, which is either vertical or horizontal depending on the relative intensity of double markup and horizontal competitions in the two industries. Finally, merger waves may happen with or without any fundamental change in the underlying economic conditions.

ABSTRACT: The last few months have witnessed new episodes in the long-running litigation concerning whether or not the minority non-controlling stake held by Ryanair in Aer Lingus can, or should, be examined under merger control provisions. This ongoing saga has re-triggered an EU-wide debate on the nature of merger control at both European Commission and Member State levels, and whether there is an "enforcement gap" that needs to be plugged. Early indications are that the Commission is taking this seriously, and is considering an amendment to the Merger Regulation to capture minority stake acquisitions. Such a step could have far-reaching consequences for international business.

This article will outline the issues raised by the Ryanair/Aer Lingus litigation, before looking to the wider debate on the notion of "control" for the purposes of the Merger Regulation. It will also consider some potential options for reform and touch on the consequences of these various approaches.

ABSTRACT: This paper identifies and quantifies econometrically the impact of leniency programs on the perception of effectiveness of antitrust policy using country level panel data evidence for a 10 year span. Leniency programs have been introduced gradually but steadily in antitrust legislation across the globe to fight more effectively against cartels. We use the dynamics of the diffusion of such policy innovation across countries and time to evaluate the impact of the program. We find that leniency programs have had a significant impact on the perception of the effectiveness of each country antitrust policy by business persons. Leniency programs have turned to be weapons of mass dissuasion in the hands of antitrust enforcers against the more damaging forms of explicit collusion among rival firms in the market place.

Ana Paula Martinez & Mariana Tavares de Araujo (Levy & Salomão Advogados) discuss Brazil's New Competition Law: Promising But Challenging. ABSTRACT: The Brazilian Congress approved in October 2011 a new antitrust and unfair competition law that significantly changes the landscape of competition enforcement in Brazil. Law 12.529/2011 was signed by President Dilma on November 30th and published in the Official Gazette on December 1st. It will take effect on May 29, 2012.

The modern era in competition policy in Brazil began with the antitrust law of 1994 (Law No. 8.884/1994), which coincided with the country's transition to a market-based economy. Law No. 8.884/1994 introduced the current institutional framework of the Brazilian Competition Policy System ("BCPS"), comprised of two investigative and advisory agencies, the Secretary of Economic Monitoring at the Ministry of Finance ("SEAE/MF") and the Antitrust Division of the Secretary of Economic Law at the Ministry of Justice ("SDE/MJ"), and a third component, the Council for Economic Defense ("CADE"), an administrative tribunal that issues final rulings in both merger and conduct cases. The inefficiencies of the current system became apparent fairly quickly, most of them related to its mandatory post-merger review system, the overlapping functions of the three agencies, and the lack of resources. As a result, policy makers began proposing amendments to the antitrust statute beginning in early 2000, but most were not enacted.

Notwithstanding such defects, during the past decade antitrust authorities in Brazil have made significant progress. Improvements since 2003 eliminated overlapping functions, so the SDE concentrated on anticompetitive conduct investigations, with special focus on anticartel enforcement, and the SEAE on merger analysis. Its anticartel program is now widely respected in Brazil and abroad, and merger review has been improved through infra-legal measures such as (i) the introduction of a "fast track" procedure for simple cases; (ii) consent decrees (Medida Cautelar) or agreements with the parties (Acordo para Presevar a Reversibilidade da Operação or APRO) that prevent complex transactions from being closed prior to CADE adjudicating the case; and (iii) the ability of administrative agencies to issue binding interpretations of law issued by CADE with the purpose of ensuring legal certainty regarding the notification thresholds. Further progress, however, depends on the long expected reform of the current system, recently approved by the Brazilian Congress.

The most relevant changes introduced by the new law are related to: (i) the creation of a single antitrust and unfair competition agency; (ii) pre-merger review and new filing thresholds; (iii) sanctions and other specific provisions addressing anticompetitive conduct investigation; and (iv) enhanced human resources for the new agency.

ABSTRACT: Dynamic competitive forces are dramatically altering mobile markets in the U.S. and around the world. Wireless networks, having sunk considerable capital in the creation of phone systems, must not only compete among themselves for subscribers, but also need to form strategic alliances with emerging handset application platforms (HAPs) created by such firms as Research in Motion (Blackberry), Apple (iPhone), and Google (Android). Current developments illustrate two fundamental aspects of innovation. First, that innovations created by one set of investors may generate returns for complementary suppliers, either via coordinated activity (strategic platforms) or competitive rivalry (appropriation). Second, that the efficiency of such ecosystems may be enhanced by market structure innovations that either extend vertical control or delimit it. This runs counter to the prevailing popular and regulatory sentiment that “open” platforms offer categorically superior welfare outcomes than do “closed” systems – aka “walled gardens.”

THE ANTITRUST AND TRADE REGULATION COMMITTEE OF THE ASSOCIATION OF THE BAR OF THE CITY OF NEW YORK CORDIALLY INVITES YOU TO THE 2012 MILTON HANDLER LECTURE

Professor Handler and the New York City Bar Association established the Milton Handler lectures in 1973 to explore significant developments in antitrust law and policy. With the help of a generous endowment created by Professor Handler, the lectures have since become a very important event for the antitrust community and have led to significant contributions to the advancement of antitrust law. This year’s lecture is in keeping with Professor Handler’s original tradition of inviting leading scholars to discuss the development of antitrust law and policy. We have invited Professor Herbert Hovenkamp, one of the nation’s leading antitrust scholars, to present his views on Innovation and Antitrust. Please join us for what promises to be a stimulating and timely program.

DATE: Thursday, February 23, 2012 TIME: 6:30 p.m.

PLACE: The Great Hall of the Association New York City Bar Association 42 West 44th Street New York, NY 10036

SPEAKER: Professor Herbert Hovenkamp, Ben and Dorothy Willie Chair of The University of Iowa’s College of Law

RSVP: There is no charge for this program; however, since seating is limited, please register by February 1, 2012, by sending an email to Norma Taylor at ntaylor@avhlaw.com with the subject line “Handler Lecture 2012.” For any questions, please contact Irina C. Rodríguez at icr@avhlaw.com or (212) 728-2208.